As part of our dedicated Private Label Issue, ESM spoke to industry leaders at a number of retailers across Europe about the innovations that they are bringing to the table, and why they believe that private label can be a kingmaker in a changing retail landscape. This article first appeared in ESM May/June 2022.
Sven Goos, International Buying Manager, SPAR International
Do you think that consumer preference for private labels increased during the pandemic?
We noted strong growth in private-label sales across our European markets during the pandemic.
At the beginning of the pandemic, we witnessed a growth in average baskets, in both physical stores and online operations, with a greater share of basket to own-brand, especially in essential grocery categories. This stock-up mission was well met by our SPAR own-brand range, which offered excellent value for money and good availability.
Private-label share gains also benefitted from shoppers being more willing to try alternatives to branded items. Switching to own-brand was not a short-term gain, as we have seen growth in private-label share largely maintained.
A trend to note is the sharp growth in added-value product ranges, such as organic, represented by SPAR Natural and SPAR Eco for sustainable products, as well as the organic range of Austrian-labelled SPAR Natur*Pur. The SPAR Natur*Pur range, with over 100 SKUs, grew at 25% in 2020, with annualised sales of over €500 million.
What has been the biggest private label innovation at your company over the past year? Are there any new product launches that proved particularly successful?
SPAR International launched a new own brand range across European markets under the label SPAR No.1 Value, which provides shoppers with an even wider choice of quality, everyday essentials at great prices. The range is a key addition to our multi-tier SPAR own-brand strategy, enabling shoppers to access a broad range of food and non-food own-brand items at exceptional value in participating SPAR stores. It comprises over 100 SKUs.
In addition, the 100% organic range – under the SPAR Natural brand – has grown to incorporate plant-based drink alternatives and healthy lifestyle options, and moved into niche product categories, such as cold-pressed sunflower oil. Growing the range, and thereby offering SPAR country organisations options that can be trialled in limited quantities, is a successful strategy for building private-label choices in SPAR stores.
Also, within SPAR, own-brand ranges have been rolled out in certain markets in response to specific consumer demand, such as high-protein options in Austria and vegan wines in the UK, to mention a few.
The retail sector has had to deal with significant food price inflation in recent months. How have you had to adapt your private-label range to accommodate these cost increases?
A strength of the SPAR organisation is the collaboration in offering SPAR own-brand products sourced through our European network of locally embedded SPAR buying teams, which ensures quality and differentiation at a good price.
This collaboration has increased further in the past two years, seeing a wider range of SPAR private-label products being introduced into stores across Europe.
Purchasing from suppliers throughout Europe and having a locally enabled pan-European sourcing and distribution network enables us to manage costs, shipping fuller loads over shorter distances, and collaborate with our supplier partners to increase efficiencies throughout the supply chain.
How have you sought to improve the ‘eco’ credentials of your private-label offering, given increased demand for sustainable options?
The past 12 months has seen the introduction of a zero-packaging, bulk-filling station for the 100% organic brand SPAR Natural. Continuous evolution also sees the packaging of existing products being changed to become more environmentally friendly, thereby reducing the environmental impact/footprint of our products and bringing them in line with our strategy of being a responsible retailer.
SPAR International offers a range of SPAR Eco products, which carry the EU Ecolabel, providing customers with a responsibly sourced range of household cleaning materials. Also, ongoing new-product development in the SPAR International-supplied own-brand ranges includes an increase in the number of products bearing the Rainforest Alliance, EU Organic, EU Ecolabel and/or Fairtrade marks. In addition, product reformulation includes, where possible, palm oil-free alternatives or, when not workable to remove altogether, RSPO-certified palm oil.
SPAR country organisations have invested considerable time and effort into product reformulation, to address consumer demand for environmentally responsible options, both in terms of ingredient sourcing and packaging materials. Informing consumers about the meanings of the different internationally recognisable certifications shown on SPAR own-brand packaging is becoming integrated into consumer messaging in store and through digital platforms.